Item 7.01 Regulation FD Disclosure
Sugarmade Inc., a Delaware corporation
(the “Company”) makes the following disclosures pursuant to Section 13 or 15(d) of The Securities Exchange Act of
1934, generally referred to as Regulation FD Disclosure.
On November 28, 2018, the Company
filed results on Form 10-K for the period ending June 30, 2018. The Company is still in process of preparing its financial report
for the quarter ending September 30, 2018 and plans to file this final report with the Commission over the near term. Relative
to the twelve-month period ending June 30, 2018 and the three-month period ending September 30, 2018, the Company had earlier believed
it would be able to recognize a substantial portion of the revenue from its Master Marketing Agreement (the “Agreement”)
signed with marketing partner BizRight, LLC (“BizRight”) and announced late in 2017. This expectation proved to be
incorrect. The Company’s independent auditor firm determined much of the revenues generated under the terms of the Agreement
with BizRight did not meet minimum standards for recognition under U.S. Generally Accepted Accounting Principles, thus the Company
reported a lower revenue amount than previously expected from the Agreement.
The Company is now taking steps
to rectify the situation relative to BizRight revenue recognition through increased testing of revenue parameters and via the final
issuance of shares owed to the owners of BizRight, in accordance with the Agreement. Additionally, the Company is exploring the
exercise of the clause in the Agreement to purchase all of the outstanding shares of BizRight. These actions are likely to allow
the Company full revenue recognition under the terms of the Agreement. There has not been a timeframe set as of yet for this exercise
at this time there is no assurance what any such exercise will take place, but final negotiations are underway and management of
the Company plans to move expeditiously toward the exercise of the acquisition option.
Sugarmade’s management team
is working diligently toward closing the recently announced Sky Unlimited, LLC dba Athena United acquisition, which was announced
on October 17, 2018.
The Company does not believe the
issues outlined above will affect the Company’s ability to meet its previously outlined revenue goal for calendar 2019 of
$70 million, thus revenue guidance for calendar 2019 remains unchanged.
FORWARD-LOOKING STATEMENTS:
This filing contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. Forward-looking statements also may be included in other publicly available documents
issued by the Company and in oral statements made by our officers and representatives from time to time. These forward-looking
statements are intended to provide management's current expectations or plans for our future operating and financial performance,
based on assumptions currently believed to be valid. They can be identified by the use of words such as "anticipate,"
"intend," "plan," "goal," "seek," "believe," "project," "estimate,"
"expect," "strategy," "future," "likely," "may," "should," "would,"
"could," "will" and other words of similar meaning in connection with a discussion of future operating or financial
performance. Examples of forward looking statements include, among others, statements relating to future sales, earnings, cash
flows, results of operations, uses of cash and other measures of financial performance. At this time there are no assurances the
Company’s acquisition efforts will be successful.